Semi-endogenous growth models with domestic and foreign private and public R&D linked to VECMs

We present semi-endogenous growth models with total-factor productivity as functions of domestic and foreign private and public R&D. In a small country case with a Cobb-Douglas TFP production function, foreign R&D drives steady-state growth and the production function can be a long-term relation in a vector-error-correction model. Marginal productivity conditions can be long-term relations for a vector-error-correction model if the functional form is of a Cobb-Douglas type or a CES function generalised to a VES function. In case of a VES function, steady states exist only for special cases of parameter restrictions.

Keywords: Productivity, endogenous (un)balanced growth, public R&D expenditure, foreign spillover

JEL Classification: O38, O40, O41, H54, H87